SunPower Adds Italian Power

SAN JOSE, Calif. ( TheStreet) -- SunPower ( SPWRA) is making solar investors wait on its fourth-quarter earnings, but it has been busy building out its European business.

SunPower announced on Tuesday it is building two 1-megawatt (MW) solar power plants in the Puglia region of Italy.

In February, SunPower announced that it was acquiring SunRay for $277 million, a European solar power project developer with a pipeline in Italy.

The two plants are located in Casamassima and Conversano and will be complete by August 2010, SunPower said in a statement.

The amount of solar in the SunPower deals may seem small on a relative basis -- 2 MW across two plants, as compared with 300 MW that First Solar announced it had on Tuesday from a utility-scale project in the U.S. However, the First Solar project is not expected to reach completion and start producing electricity until 2013. SunPower already runs the largest solar power plant in Italy, which generated 24 MW of electricity.

What's more, while the 2 MW might not seem like a game-changer for SunPower, solar companies' ambitions in Italy are large. This earnings season, as solar companies have tried to send the message that the feed-in tariff reductions in Germany will not be a game-changer for the sector, Italy is playing a prominent role as the next solar boom market.

An Italian industry minister recently noted that the country's solar capacity had reached 1 gigawatt ahead of schedule. Italy had originally planned to cap annual solar at 1.2 GW, but it is expected that Italy will allow its solar capacity to surpass that threshold and not implement reductions in its feed-in tariffs until January 2011.

There is expected to be a rush of solar deals in Italy in the second half of 2010 to take advantage of the current Italian feed-in tariff scheme before it goes the way of Germany.

The SunRay acquisition will deliver to SunPower a potential project pipeline of more than 1,200 megawatts (MW) in Italy, France, Israel, Spain, the United Kingdom, and Greece.

The 1 MW power plants in Italy are being built by SunPower in conjunction with Milan-based K6, an Italian investment company focused on the development of solar projects. In 2010, K6 is focused on developing and connecting to the grid approx 20 MW in the southern part of Italy.